Velis & Company · M&A and Exit Advisory for Transformational Technology

Much of what a company sells for is determined before a buyer is ever contacted.

Boards are told the company is ready. It usually is not. Value disappears in that gap, quietly, in diligence, months after the board has committed to a process it can no longer leave. We close the gap first.

No fee from buyers. No bank affiliation. No equity in the company. No fee conflicts.
We are paid by the seller, and only by the seller.

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Before you take the board's decision

Your management team has told you the company is ready.

Here is what a risk-averse buyer will actually ask.

And it goes deeper than that.

Your management team is not lying to you. Almost every company believes it has a data room, because it has a folder structure and most of the documents in it. What it does not have is a set of records assembled to answer the questions of a buyer whose job is to find the reason to pay less. Those are different artifacts, and the difference does not become visible until exclusivity has already been signed.

If the board cannot answer these questions, the board does not know what the company is worth.

The evidence

The condition of a company's records predicts what it sells for.

This is not a claim from experience. It has been established in the peer-reviewed accounting literature, and the finding is more pointed than most sellers expect.

Skaife and Wangerin built a measure of financial reporting quality and applied it to acquisitions where the outcome could be observed. Acquirers offered higher premiums for targets whose reporting was poor. Those same transactions were then significantly more likely to be renegotiated, and significantly more likely to collapse outright. Failed targets proved more likely to restate their financials after the deal had been announced.

Read that sequence in order, because the order is the whole point. The high number comes first. The renegotiation comes later, after diligence, when the seller has been off the market for months and has no alternative left to reach for.

The finding has held up. Marquardt and Zur, working independently, found accounting quality positively related to the likelihood a deal completes at all. Wangerin found that where acquirers cut diligence short, they paid for it afterward in impairments and in post-acquisition performance, which is why serious buyers do not cut it short.

A buyer cannot distinguish between a company with problems and a company that cannot demonstrate it has none. Both look the same from across the table, and both get priced the same way.

Skaife, H. A. and Wangerin, D. D. (2013), Target Financial Reporting Quality and M&A Deals that Go Bust, Contemporary Accounting Research 30(2), 719–749. Marquardt, C. and Zur, E. (2015), The Role of Accounting Quality in the M&A Market, Management Science 61(3), 604–623. Wangerin, D. D. (2019), M&A Due Diligence, Post-Acquisition Performance, and Financial Reporting for Business Combinations, Contemporary Accounting Research.

These studies examine public-company targets, where the data exists. The mechanism does not depend on being public. It depends on whether a buyer can verify what it was told, and on how long it takes to find out that it cannot.

What the technology is worth

Value is what your technology changes for the buyer.

Transformational technology is not priced off comparable transactions, because there is nothing comparable about it. It is priced off what it changes for the acquirer, and that runs in three directions at once.

What they cannot do now

A category entered without building it. A capability they have failed to develop internally, sometimes more than once. A position that becomes defensible, and a competitor's roadmap that becomes irrelevant.

What they stand to lose

The larger number is often defensive. An incumbent watching a technology shift threaten an installed base and a consumables stream is not evaluating an acquisition. It is evaluating whether its existing business survives the next decade. That calculation produces prices no comparable screen will predict.

What it gives them access to

Sometimes the operating business is not the point. Intellectual property, a regulatory position, a data asset, or a platform that unlocks something adjacent can be worth more than the revenue attached to it, and the buyer's technical and legal teams often set that value rather than corporate development.

These are different arguments, they carry different weight with different acquirers, and the seller who leads with the wrong one leaves the difference on the table. We build the case for each buyer separately, because the advantage the technology confers on one acquirer is not the advantage it confers on the next.

What most processes never attempt

The best buyer often has not decided they are a buyer yet.

Corporate development teams work from a mandate. The mandate reflects a strategy set some time ago, by people who were not looking at your technology when they set it. A company whose stated priorities do not name your category is not uninterested. It is unaware, and no process built on matching an asset to a published strategy will reach it.

The work is to build the case: what this technology makes possible for that specific acquirer, why it is defensible, how it integrates into what they already run, what it does to their position over five years, and what it costs them if someone else owns it. Not a pitch. A strategic argument, built from their business rather than ours.

The person receiving that argument has to carry it internally. They will present it to a committee, defend the integration plan, and answer for the price. Whether they can do that determines whether there is a transaction. The seller's job is not to persuade one executive but to arm them.

Doing this credibly requires knowing enough about the acquirer's business to be worth listening to, and enough about integration to answer the question that always follows: how would this actually work inside our company? An advisor who cannot answer that gets one meeting.

This is the through-line in every transaction below. In each one, the value came from a case the buyer had not yet constructed, made credible enough that they built the deal around it.

How it works

Three phases. The second one is the one that decides the outcome.

PHASE I

Evaluation

Available on its own

An independent assessment of what a sophisticated buyer will find. IP chain of title. Cap table and shareholder record. Regulatory position and the certainty behind it. Quality of financial records. Design history files. Contracts and change-of-control exposure. Customer concentration.

Delivered to the board in writing, with findings prioritized by what a buyer will price.

This is not a valuation. A valuation tells you what a model says the company is worth. This tells you what a buyer will find, what it will cost you when they find it, and what can still be fixed while you have time to fix it.

Boards that want only the evaluation can stop here. Many should start here and go no further until they have read it.
PHASE II

Preparation

The centerpiece

The findings, closed. We identify the gaps, sequence them by the cost of leaving them open, and coordinate the counsel, auditors, and regulatory specialists who resolve them, working with management, who own the company and own the fix.

The output is a company that survives diligence, and a data room built before it is needed rather than during.

This is not an audit of your management team. Your team built the company; they did not build it to be examined by a hostile accountant, and no operating company is run that way. The work is to get the record into the condition a buyer requires, Your CEO wants the same outcome the board wants: no surprises in front of a buyer.

And it is not something the CFO absorbs alongside the job. Chasing unsigned IP assignments across former employees and contractors, reconstructing shareholder notification records, and closing a design history file is months of work that arrives at exactly the moment your finance function is also running a live process. Preparation done under process pressure is preparation done badly, which is the same as not doing it.

PHASE III

Process

Buyer identification

The obvious acquirers are on the list, and they belong there. The work is what comes after. No one knows in advance whose strategic imperative is shifting: a new entrant, an adjacent-category player, a strategic that has just lost a position and needs it back. None of these appear on a comparable-transactions screen, and most are not identifiable without going and finding out.

We do that work, because a real alternative is the only thing that creates leverage. A process with three interested parties and a process with one produce different outcomes from identical assets. That is not a theory about negotiation; it is the mechanism by which price is set.

Reporting

Every outreach, every conversation, every contact, logged and reported. Each week the company receives a written report giving contact information, what was said, and where each conversation stands, and a scheduled call to walk through it. The report is the record; the call is where the board decides what to do about it. Management is in the process throughout; a company cannot be sold otherwise. The board decides whether reporting runs to the full board or to a transaction subcommittee.

You are paying for a process. You should be able to see it. Sellers routinely find, after the fact, that they cannot reconstruct who was approached, who declined, and why. The board was deciding without the information its own process was producing.

Negotiation and close

Buyer-specific positioning, structure design, negotiation, and close, including the mechanisms that determine whether the headline number is the number you receive.

Valuation and negotiation

The value a transaction creates belongs to neither party until someone captures it.

Every curve below is a stream of free cash flow over time. The discounted value of each curve is a valuation. What separates them is not the technology. It is whose hands the technology is in.

Where the price is decided inside that spread is largely a question of how many parties are live, and the economics on this point is unusually blunt. Bulow and Klemperer proved that a seller is better served by a plain auction with one more genuine bidder than by the most skillfully constructed negotiation with one fewer. Their conclusion was that negotiating skill is worth less than competition.

Years from close Free cash flow

Step 1 of 7

Weeks from launch Buyer A Buyer B Buyer C Terms set Price

Step 1 of 5

Simultaneity is the whole problem.

Two buyers three months apart are one buyer, twice. The value of a second party is entirely a function of whether it is live at the moment the first one is deciding.

Where a company is genuinely in demand, a process can be run to a date and the date will hold. That is the exception. For early-revenue technology companies, dates are frequently ignored on purpose. A buyer that misses the deadline is not disorganized. It is waiting for the auction to break, so it can negotiate against a seller with no alternatives left and a board that was told a process was underway.

Getting three parties to arrive at the same place at the same time, without a date to enforce it, is the part of this work that does not appear on any process timeline.

The temptation, and why it ends the deal.

The obvious shortcut is to imply a competing buyer who is not there. It is common enough that experienced acquirers watch for it.

They find out. Diligence, industry contacts, bankers who talk to each other, a name that does not check out. The discovery is not a risk. It is a schedule. And when it happens, the loss is not the negotiation. It is the counterparty's trust, permanently.

An acquirer that learns it has been played will frequently walk. If it returns, it returns knowing exactly what the seller's position actually is, and it will price that knowledge into every term that follows.

Where competition stops being the answer

The auction result above assumes the price is cash. Once payment can be contingent, through earnouts, equity, royalties, or milestone structures, it no longer holds cleanly. Hoffmann and Vladimirov showed that a seller with the ability to negotiate contingent terms often does better against fewer bidders than in a wider auction, and Boone and Mulherin found that in practice negotiated M&A transactions are at least as common as auctions without producing worse outcomes for sellers.

That is the mathematical case for deal architecture. Competition sets the price when the price is a number. When the consideration has structure, what the seller can design is worth more than what the seller can auction. Most sell-side processes are built to produce competition and stop there, which works until the buyer proposes an earnout, at which point the entire outcome moves onto ground the process was never designed for.

Bulow, J. and Klemperer, P. (1996), Auctions versus Negotiations, American Economic Review 86(1), 180–194. Hoffmann, F. and Vladimirov, V. (2025), Auctions versus Negotiations: The Role of the Payment Structure, The Journal of Finance 80(3), 1769–1813. Boone, A. L. and Mulherin, J. H. (2007), How Are Firms Sold?, The Journal of Finance 62(2), 847–875.

Before you choose an advisor

The most effective sales tool in this business is a number.

Every firm you interview will give you one. It will be higher than the last one you heard, because the firm knows you are talking to others and knows how the decision gets made. The number costs nothing to say and it is not a forecast. It is how the engagement is won.

What it costs is paid later, by you.

A high number is not a neutral error. It sets a reserve the market will not meet, targets the acquirers who would pay it rather than the ones who will, and produces a process where nobody bids. Then the number comes down. Then it comes down again. Every reduction is visible to the people watching, and the buyers who were waiting for exactly that arrive one at a time, each negotiating alone against a seller whose position is now demonstrably weaker.

The mechanism, in a market where asking prices are published

Listed to win the listing

$5.9M → $4.75M

Cut to $5.4M, cut again, sold at $4.75M. One buyer. No competition. Five months of a stale listing behind it.

Listed to win the sale

$4.495M → $5.15M

Twenty parties in the first week. Cleared above ask. Same house, same market, same month.

Illustrative. The asking price was the variable, and the party who set it was the one who wanted the listing.

Private companies are not listed at a price, but the pitch is the listing. The number a board is given at the outset shapes every decision that follows: which buyers are approached, when a bid gets called disappointing, and how long the board waits before accepting one.

None of this means a low number is the safe answer.

Anchoring is real. The first number stated exerts pull on every number after it, and a seller who opens conservatively has given away as much as one who opened impossibly, quietly, and without ever finding out. Processes that clear well are run by sellers who understood their value, set the reserve deliberately, and had a strategy for defending both.

The tension is genuine and it does not resolve into a rule. Anchor too high and you never learn what the market would have done, because the market never engages. Anchor too low and you learn, at a price. No formula locates the point between them. There is only judgment about a particular company, in a particular window, in front of particular buyers, and that judgment is what a board is hiring.

What separates a working anchor from a failed one is not its height. It is whether it was set to win the mandate or set to win the negotiation. A number chosen because a competing pitch was higher has no argument behind it, and it collapses the first time a buyer pushes. A number built from what a specific acquirer's position can bear survives contact, because when it is challenged there is something to say.

So I will give you a number. I will also tell you what it rests on, which variables move it in either direction, where the uncertainty sits, and what would cause me to revise it, before you sign anything rather than after.

That is a worse pitch than the one you will hear elsewhere, and it costs me engagements.

It also means a meaningful share of my work arrives late. Boards call after the number has come down twice, with a process to rebuild and a negotiation to take over. That work is available and I take it. It is simply more expensive, and less of the value is recoverable, than if the same conversation had happened at the start.

The negotiation

A name on a pitch book does not negotiate. A person does.

Running a process and negotiating a deal are different jobs. Both are done well or badly, and a board rarely sees the difference until the outcome has already been determined.

The process itself is not administration. Every step is a judgment call, and each one is routinely made without one.

None of that is easy, and none of it is learned quickly. It requires having sat on a board that received a book like this, having been the investor evaluating a company like yours, and having been the operator whose team was in those meetings.

Then there is the negotiation itself. What the company receives is decided by whoever is in the room when terms are set, and by what that person recognizes the moment a buyer's position shifts.

Ask who will be in the room.

When a board retains a firm, the people who present are rarely the people who execute. Ask, in writing, who will run your transaction day to day, how many deals that person has negotiated to close, what else they are carrying, and who they escalate to. Ask what happens to your process when the senior person on the pitch is originating the next mandate.

Every board is entitled to these answers before it signs. Very few ask.

Here, the person who pitches is the person who negotiates. There is no one to escalate to, and no one the work gets handed down to.

Founder

Founder of Auris Health. Built and financed growth companies from formation.

Operator

Inside companies through to exit, accountable for the plan rather than advising on it.

Investment banker

Sell-side transactions. 35 M&A closings negotiated.

Venture and private equity partner

On the investing side of the table, evaluating the same companies from the other direction.

Director

Inside the boards that approve these decisions and live with them afterward.

Cross-border

Transactions negotiated in the US, the EU, the Gulf, Japan, Korea, China, and Australia.

Each of those seats teaches something the others do not. What a corporate development team is actually authorized to concede. What a board will and will not approve. What a founder will give up and what makes them walk. What an investor is protecting, and when.

We represent companies built by people who build companies, and we have been on every side of this table.

Cross-border

A term sheet does not mean the same thing in Osaka that it means in Boston.

Transactions negotiated in the United States, the European Union, the Gulf, Japan, Korea, China, and Australia.

What silence signals in Seoul. What a Gulf counterparty regards as settled versus still open. How consensus actually forms inside a Japanese acquirer, and how long it takes. What a German supervisory board requires before a signature is possible.

These are not translation problems. They are structural differences in how agreement is reached. A negotiator who does not know them will misread the room at the moment it matters and never learn that he did.

That does not come from a deal list. It comes from decades of sitting in those rooms.

Independence

We are not a bank. We do not make markets, trade, underwrite, or run secondaries for the firms sitting across the table from you.

What we have with those firms is reputation. Decades of transactions produce relationships with acquirers, and those relationships open doors and get calls returned. What they do not produce is an obligation. No buyer is a client. No buyer pays us. Nothing we recommend to you is shaped by a relationship we need to protect on the other side.

A bank's relationships with your buyers are real, and so are its other obligations to them. Ours are relationships without a second set of books.

That is not a claim about character. It is a description of who signs the check.

Published work

The thinking, in full.

Parts I and II examine two transactions in the same industry, structured two different ways. One became the case study in what goes wrong after closing. The other paid $375 million on schedule with no litigation. Read together, they show that the difference was decided before either deal signed.

Published in the Structural Literacy Series by AEIOU Academy.

White paper · Structural Literacy Series, Part I

Capturing Value at Exit

The $2.35 billion Auris Health earnout, taken apart. Traces how the milestones were architected, which contingencies remained unresolved at closing, and how those two facts decided the way value reached founders, executives, and capital.

Read the paper

White paper · Structural Literacy Series, Part II

The Structural Alternative

The Spine Solutions earnout paid $375 million on schedule with no litigation. I designed and negotiated its protection mechanisms. This paper applies that architecture retrospectively to Auris, and gives founders a diagnostic: propose fund-or-forfeit with full reversion, then watch what the buyer does with it.

Read the paper

White paper

The $60M Exit Where Founders Got $0

Sixty million dollars in acquisition proceeds flowed past the founders and into the preferred stack. The paper walks the liquidation preferences, the participation rights, and the waterfall term by term, and marks the financing rounds where the outcome was already decided.

Read the paper
Christopher J. Velis

Christopher J. Velis · Boston

About

Deal architecture matters more than deal pricing.

The question most sellers ask is what the best price for this asset is. The better question is what structure captures this asset's actual value. The headline number and the realized number are often different, and the difference is written into the mechanism, not the multiple.

Velis & Company is the practice of Christopher J. Velis. The career behind it has run through every seat at the table rather than one: investment banker covering medical technology and biotechnology, private equity operator, founder of a venture fund, company founder, and director on the boards that approve these decisions and live with them afterward.

That range is the whole point. An advisor who has only ever advised knows what a transaction looks like from one chair. The judgment that decides a negotiation, what a corporate development team can concede, what a board will approve, what a founder will walk away from, comes from having sat in each of them.

He co-founded Auris Health, acquired by Johnson & Johnson in a transaction valued at up to $5.75 billion including milestone consideration. Confirm formulation Across a career he has been across the table, on the board, or in the lead chair on more than a hundred transactions, of which thirty-five were M&A closings he negotiated, a figure that excludes financings, venture fund closings, and private equity fund closings.

He has taught and spoken on cross-border medical technology transactions in the United States, Europe, the Gulf, and Asia, including the keynote at the Chengdu Global Innovation and Entrepreneurship Fair, and he holds NACD directorship certification. He is a co-founder of AEIOU, where he teaches the structural mechanics of building, financing, and exiting growth companies.

Most of the companies worth selling were built by people who put a decade into them. What a board decides across a six-month process determines what that decade was worth. That is why preparation is not administrative work, and it is why I will tell a board it is not ready to sell. The severity is the service. None of it is adversarial to the people who built the company. It is the opposite.

The firm takes a small number of engagements. The person who takes the call is the person who does the work.

Every engagement begins with an evaluation.

A scoped, independent assessment of what a buyer will find, delivered to the board in writing. Not a pitch and not a valuation. A set of findings the board can act on.

Waiting is a decision. Every month a company operates without addressing what a buyer will find, the remediation window narrows and more of the gaps become permanent: an assignment you can no longer obtain because the engineer left in 2019, a notification you cannot make timely because the date has passed. The preparation work has a shelf life that runs backwards.